M.N. Mohammad Mirza Alias Mirza vs B. Subhan Saheb on 6 July, 1993

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Andhra High Court
M.N. Mohammad Mirza Alias Mirza vs B. Subhan Saheb on 6 July, 1993
Equivalent citations: 1993 (3) ALT 634
Author: M Rao
Bench: M Rao, G N Rao

ORDER

M.N. Rao, J.

1. This letters patent appeal is from the judgment of a learned single Judge in A.S.No. 1134 of 1987 dismissing the appeal preferred by the appellant-defendant No. 1 against the judgment and decree in O.S.No. 55 of 1981 on the file of the Court of the Subordinate Judge, Adoni, decreeing the suit of the respondent-plaintiff for specific performance of an agreement of sale (Ex.A-1) dt.28-4-1981 in respect of the house bearing No. 601 of Ward No. 18 in Adoni town. Defendants 2 to 11 in the suit are either sisters or legal representatives of the sisters of the first defendant, the owner of the suit house and the learned Counsel for the appellant rightly says that they are not necessary parties to this appeal.

2. The appellant-defendant is the owner of the suit house. It is recited in Ex.A-1 that the sale consideration is Rs. 28,100/-, out of which, Rs. 5,000/- was taken towards advance by the appellant and the balance consideration should be paid by the respondent-plaintiff before 29-5-1981 for entitlement for registration and failure to get the sale deed registered by that date would entail forfeiture of the deposit and cancellation of the agreement. The appellant undertook that on his part if he fail to register the document, the respondent would be entitled to file a suit and obtain registration through Court. Ex.A-1(a) is an endorsement in the hand-writing of the respondent bearing the date 6-6-1981 on the reverse of Ex.A-1 and it reads: “The time stipulated in this agreement is extended till I obtain discharge endorsement on the mortgage deed or the property and till I produce the same before you. Thereafter, I can register the same in your favour”. The endorsement bears no signature.

3. The suit was filed alleging that when the respondent applied to the Sub-Registrar for an encumbrance certificate on 25-4-1981 in respect of the suit house, he found from the certificate that the property was subject to a mortgage of Rs. 15,000/- repayable with interest at 12% per annum and he asked the appellant to ascertain whether the mortagage was redeemed and the mortgage bond obtained. He tendered the balance of sale consideration to the appellant and demanded him to receive the same and execute the sale deed on 27-5-1981. The appellant while informing that the mortgage had been discharged and the redeemed mortgage bond was in Bombay, has been evading to register the sale deed. Keeping in readiness the balance amount, the respondent purchased non-judicial stamps of the value of Rs. 2,800/- and that he has been always ready and willing to perform his part of the contract. It was also alleged by the respondent in the plaint that when he demanded specific performance of the contract by issuing a lawyer’s notice (Ex. A-2) on 23-6-1981, a reply (Ex. A-3) was sent by the appellant with false and untenable allegations. Asserting that time was not the essence of the contract and it was never intended to be so, it was averred in the plaint that the respondent was depositing the balance of sale consideration in the Court and “if the mortgage dated 29-7-1981 has been fully redeemed and the discharged mortgage bond is with the defendant, the entire amount may be paid to the defendant or if any amount is due under the said mortgage bond, such amount may be withheld by the Hon’ble Court for discharge of the mortgage and the balance paid to the defendant”.

4. Resisting the suit, the appellant in his written statement averred that time was the essence of the contract and this was made clear in the agreement, Ex.A-1. It was his specific case that at the time of Ex.A-1, agreement, the discharged original mortgage deed was shown to the respondent and also a copy of the judgment in another suit OS. No. 25 of 1978 filed by the appellant against the Adoni Municipality and after satisfying that the suit house was free from encumbrances, the respondent entered into Ex.A-1 agreement. As the respondent failed to pay the balance of sale consideration within the stipulated time i.e., 29-5-1981, the agreement Ex.A-1 automatically stood cancelled and the advance amount of Rs. 5,000/- was forfeited because of the breach committed by the respondent. He admitted that the suit house was mortgaged for Rs. 15,000/- but the same was discharged completely by 28-2-1973 and the endorsement of cancellation on the mortgage deed was brought to the notice of the respondent at the time of the execution of Ex.A-1 agreement. Denying the allegation that the respondent tendered the balance of sale consideration on 27-5-1981, it was pleaded by the appellant that after expiry of the stipulated period, the respondent approached him requesting for extension of time with the endorsement Ex.A-1(a) and asked him to sign on it, but refusing to do so, he told the respondent that breach of agreement was committed and therefore, the advance amount was forfeited. As the respondent came up with false averments, he was not entitled to the equitable relief of specific performance.

5. Before the trial Court, the plaintiff (respondent herein) figured as P.W.1 and one Sudhakar, a merchant of Adoni who attested Ex.A-1 agreement, was examined as P.W.2. The appellant gave evidence as D.W.1 and one Zaini Saheb, attestor of the mortgage deed, Ex.B-1, was examined as D.W.2. Four other persons also figured as witnesses on behalf of the defendants. One of the issues considered by the learned trial Ju4ge was whether the suit document Ex.A-1 was materially altered and he recorded the finding that the endorsement Ex.A-1(a) did not amount to material alteration affecting the contract and observed “this aspect is not much stressed by the advocates appearing for the defendants”. Holding that time was not the essence of the contract and after considering the documentary evidence regarding the readiness and willingness on the part of the respondent to perform his part of the contract, the learned trial Judge expressed the opinion that there was undoubtedly a mortgage deed (Ex.B-1) much earlier to the suit agreement Ex. A-1 and on verification about the existence of the document, the respondent got issued lawyer’s notice, Ex.A-2, calling upon the appellant to execute the sale deed and, therefore, there was no breach of the terms of the contract. On that view, a decree for specific performance was granted.

6. On appeal, the learned single Judge considered the point whether time was the essence of the contract and answered the same against the appellant. According to the learned Judge, the respondent was having enough money to purchase the suit house and he also purchased non-judicial stamps of Rs. 2,800/- on 3-6-1981 itself and kept the balance of sale consideration ready for payment at the time of the execution of the sale deed and from the fact that the balance of sale consideration was deposited in the Court at the time of filing of the suit, the conclusion was drawn that the respondent was ready and willing to perform his part of the contract and he also had the capacity to pay the balance of sale consideration within the stipulated period. The learned Judge also observed in passing: “In fact, that finding (trial court’s finding) is not seriously challenged by the learned Counsel for the appellant”. Dealing with the endorsement, Ex.A-1(a) – upon which the appellant-defendant’s contention that the respondent-plaintiff was not ready and willing to perform his part of the contract rested – the learned Judge, after adverting to the evidence of P.W.1 (respondent-plaintiff) and D.W.1 (appellant-defendant), held:

“There is thus an oath against oath of the plaintiff and the first defendant as to under what circumstances Ex.A-1(a) endorsement was made. If really the plaintiff approached the first defendant seeking extension of time under Ex.A-1(a) endorsement, the first defendant could have struck-off that endorsement and noted therein that as the plaintiff did not pay the balance of sale consideration, the agreement stood canceled. The mere existence of Ex. A-1(a) endorsement does not prove that the first defendant has exercised the option of cancelling Ex. A-1 agreement of sale as per the terms contained therein”.

7. Sri Suresh Kumar, learned Counsel for the appellant, although has raised several contentions the endorsement Ex. A-1(a) amounted to material alteration of the suit document, time was the essence of the contract and the plaintiff was not ready and willing to perform his part of the contract confined his arguments to the aspects: (1) that the respondent is not entitled to the equitable relief of specific performance as he came to the Court with sullied hands setting up a false case by suppressing the endorsement Ex.A-1(a) in the plaint; (2) the conflicting evidence of P.Ws. 1 and 2 on the question of the respondent depositing the balance of sale consideration with P.W. 2 leading to the inference that P.W. 1 (the respondent herein) was not ready and willing to perform his part of the contract; and (3) with a view to surmount the difficulty, the endorsement Ex.A-1(a) was brought into existence.

8. Controverting these contentions, Sri J.V. Suryanarayana Rao, learned Counsel for the respondent-plaintiff, has urged that the endorsement Ex.A-1(a) has relevance only in the context of the plea of the appellant that time was the essence of the contract. As both the trial Court and the learned Single Judge ruled that time was not the essence of the contract, Ex.A-1(a) endorsement cannot be pressed into service for any other purpose. The readiness and willingness on the part of the respondent has to be judged in the over all context but not from a single incident like P.W.2 not corroborating the version of P.W.1 as to the deposit balance of sale consideration.

9. Under the Specific Relief Act (for short “the Act”), the Court exercises equitable jurisdiction. Section 20 of the Act makes it clear that the jurisdiction to decree specific performance is discretionary and there is no obligation on the part of the Court to grant the relief sought merely because it is lawful to do so. But at the same time, the discretion has to be exercised by the Court guided by sound judicial principles. It is settled law that false allegations in the plaint dis-entitle the plaintiff for the relief of specific performance. A Division Bench of the Madras High Court in Sririgneedi Subbarayadu v. Kopanathi Tatayya and Ors., 1973 M.W.N. 1158 held:

“A plaintiff who is capable of setting up a false case cannot expect a Court of equity to grant him relief”.

This statement of Jaw still holds the field. Following this ruling, it was held by this Court in K. Venkatasubbayya v. K. Venkateswarlu, AIR 1970 A.P. 279:

“….the plaintiff who seeks equitable remedy of specific performance must come to the Court with clean hands”.

10. In the light of the extant legal position, the case pleaded by the respondent has to be judged. Two vital averments in the plaint are: (i) that on 24-5-1981, the respondent-plaintiff applied to the Sub-Registrar for an encumbrance certificate in respect of the plaint schedule property and the certificate disclosed that the property was subject to a mortgage of Rs. 15,000/- and when the appellant defendant was asked as to whether the mortgage has been redeemed, the latter informed that the mortgage was discharged and the redeemed mortgage bond was in Bombay and he was making arrangements to get the same and in spite of saying that the appellant has been evading; and (ii) the balance of sale consideration was deposited by the respondent with one R. Sudhakar (P.W.2), a merchant of Adoni, for payment to the appellant at the time of registration. These averments constitute the foundation of the respondent’s case. The so-called encumbrance certificate obtained on 24-5-1981 was not produced by the respondent nor did he prove that on that date he applied for such a certificate. Ex.A-1, the suit agreement, executed by the appellant clearly recites:

“I am the absolute owner and possessor of the property and there are no encumbrances on the property”.

Within one month thereafter, it is difficult to believe, that the respondent had applied for an encumbrance certificate in respect of the suit property. Normally, the purchaser always takes care to ascertain whether the property is encumbered and only after satisfying himself that it is unencumbered he becomes a party to an agreement of sale. There are no circumstances warranting that this precaution was not taken by the respondent in this case. Ex.A-2, lawyer’s notice dated 23-5-1981, issued on behalf of the respondent to the appellant refers to the respondent obtaining the encumbrance certificate on 24-5-1981 and the document disclosing mortgage to the extent of Rs. 15,000/- and alleges that the appellant has adopted an evasive attitude. These allegations appear to be wholly untrue. In Ex. A-3, reply notice, dated 8-7-1981 issued by the appellant’s advocate to the advocate for the respondent, this allegation is not only specifically denied but a categorical assertion is made:”….the discharge of mortgage was shown to your client on the date of entering into the agreement itself. So, there is no question of any type of understanding for applying for encumbrance certificate….”. Viewed in the context of the respondent not producing the encumbrance certificate claimed to have been obtained on 24-5-1981, the plaint averment in this regard is patently false. The cancellation endorsement Ex.B-1(a) dated 28-2-1973 on Ex. B.1 mortgage dated 9-7-1971 clearly falsifies the respondent’s case that the suit property was subject to mortgage on the date of Ex.A-1, agreement.

11. Equally unfounded is the averment in the plaint that the balance of sale consideration was deposited by the respondent with P.W.2. Ex.A-2, suit notice, dated 23-6-1981 is silent on this aspect. In his evidence as P.W.1, the respondent testified in unequivocal terms: “I had deposited the sale amount with R. Sudhakar (P.W.2), a merchant of Adoni for payment to the first defendant at the time of registration”. The said Sudhakar figured as P.W.2; he is also one of the attestors of Ex.A-1. He has not stated anything about the respondent depositing the balance of sale consideration with him for payment to the appellant at the time of registration. This witness has clearly stated many details like Ex. A-1 having been executed at his shop, the terms incorporated in that document and its attestation along with him by another person but he has not said anything about the vital aspect of the respondent’s case concerning the deposit of the balance of sale consideration with him. The trial Court and the learned single Judge have not considered this aspect.

12. Whether the respondent was ready and willing to perform his part of the contract? The trial Court as well as the learned single Judge, after considering the evidence, answered this point in favour of the respondent. The respondent is a commission agent doing business in cotton and ground-nut. Exs.A-6 to A-10 are chits issued by certain firms in Adoni showing that the amounts mentioned therein were due to the respondent. Exs.A-11 and A-12 are the certificates issued by the Vysya Bank. Ex.A-13 is the joint account in the name of the respondent and his wife in Canara Bank. From these documents, no doubt, the conclusion emerges that the respondent had sufficient money available with him to pay the balance of sale consideration. But the question is whether he was willing to do so? The availability of funds with the purchaser normally leads to the initial presumption that the person is willing to perform his part of the contract but in the particular circumstances of the case, that presumption is rebutted. Ex.A-1(a) is an endorsement in the handwriting of the respondent on Ex.A-1 suit agreement. It recites that the time stipulated in the agreement is extended till the appellant obtains discharge endorsement on the mortgage deed and produces the same before the respondent and only thereafter, registration would be done. This endorsement does not bear the signature of the appellant although it purports to extend the time stipulated in Ex.A-1 for performance of the contract. We are not concerned with the question whether this endorsement amounts to material alteration. What is undeniable is that the plaint is conspicuously silent about this endorsement. The reply notice, Ex.A-3, issued by the appellant’s counsel to the respondent’s counsel gives out the version that one week after expiry of the stipulated period, the respondent approached the appellant with a request to extend time but the appellant did not accede to the request. In clear terms, it is stated in paragraph 3 of Ex.A-3:

“Your client approached my client about 1 week after the stipulated time i.e., 28-5-1981 and requested my client to extend the time for performance of the contract. My client refused to do so. Futher my client informed him that as your client failed to pay the balance of consideration within the stipulated time as per the terms of the agreement, the same was cancelled and my client was also not liable to refund the advance of Rs. 5,000/– By suppressing these facts, your client got issued a false notice to my client”.

Conveniently suppressing this aspect, the respondent instituted the suit. When Ex.A-1 the foundation of the suit contains an endorsement Ex.A-1(a) in the hand writing of the respondent, by which the appellant purported to have extended the time for performance of the contract, although it does not bear his signature, it was the bounden duty of the respondent to aver in the plaint the circumstances under which the endorsement was written by him especially after the assertion of the appellant’s advocate in the reply notice Ex.A-3 that the appellant declined to accede to the request of the respondent to extend time for performance of the contract. By suppressing this vital fact, the respondent came up with a false case.

13. In an attempt to overcome this insurmountable difficulty, the respondent invented the theory of the suit property being subject to mortgage and the appellant not producing the discharged mortgage bond adopting an evasive attitude. Having taken this specific plea that the suit property was subject to mortgage as disclosed in the the encumbrance certificate dated 24-5-1981 obtained by him, in the normal course, it was expected of the respondent to produce the document. That the averment in the plaint on this aspect is totally false clearly emerges from the respondent’s admission as P.W.1 in the cross-examination: “I was informed that there is an encumbrance by way of mortgage over the house property by the Sub-Registrar’s office. I did not obtain a copy of that mortgage deed even after reply (Ex.A-3) was given to my notice (Ex. A-2)”. Having made this statement, P.W.1, quite surprisingly, asserted in the cross-examination: “only because the mortgage deed was not discharged, I could not obtain the sale deed by registration.” Thereafter, another falsehood was uttered by him by asserting: “On verifying the encumbrances, I came to know about the mortgage”. The purchase of stamp papers by him of the value of Rs. 2,800/-was a clear device to add strength to the false case set up by him. The endorsement Ex.A-1(a) on Ex.A-1 clearly shows that the respondent was not willing to perform his part of the contract and that was the plain reason why he resorted to the device of incorporating the endorsement, Ex.A-1(a) and failed in his attempt to persuade the appellant to sign on it. The further evidence of P.W.1 that the endorsement Ex. A-1(a) was made by him at the instance of the appellant who agreed to sign on it but did not do so is totally devoid of credibility.

14. The appellant in his evidence as D.W.1 denied the respondent’s version as to the endorsement Ex.A-1(a) and his version rings true. The learned single Judge was not right in brushing aside the evidence of the appellant and the respondent by merely observing: “There is thus an oath against oath of the plaintiff and the first defendant as to under what circumstances Ex.A-1(a) endorsement was made”. The further observation of the learned Judge: “If really the plaintiff approached the first defendant seeking extension of time under Ex.A-1(a) endorsement, the first defendant could have struck off that endorsement and noted therein that as the plaintiff did not pay the balance of sale consideration, the agreement stood cancelled” is very unrealistic. When the document was in the custody of the respondent who approached the appellant to sign on it and when the latter refused, it would not be possible for the appellant to forcibly snatch it and strike off the endorsement.

15. Based upon the document Ex.A-4 a feeble argument was pressed into service by the learned counsel for the appellant (sic. respondent) in an attempt to sustain the judgment under appeal. Ex.A-4 is an encumbrance certificate issued by the Sub-registrar, Adoni, on 14-2-1986 in respect of Ac.1-52 cents of land in S.No. 44 B1 A owned by one Mohammad Saheb: It discloses two mortgages in favour of two individuals Sankara Reddy and Satyanarayana. We fail to comprehend the relevancy of this document in the context of the respondent’s plea that the suit house was under mortgage. Ex.A-4 neither pertains to the suit house nor Mohammad Saheb is the appellant-defendant before us.

16. It is thus clear that on vital and important aspects the plaintiff’s case is false and equally false is his testimony as P W.1. He came to the Court with unclean hands. He is, therefore, not entitled to the equitable relief of specific performance under Section 20 of the Act. However, we are of the view that he is entitled to refund of Rs. 5,000/- paid by him as advance under’Ex.A-1 to the appellant since time is not the essence of the contract.

17. The letters patent appeal is, therefore, allowed. The judgment and decree of the trial court as confirmed by the learned single Judge are set aside and the suit of the respondent-plaintiff is dismissed except to the limited extent of Rs. 5,000/-, the advance paid by him and received by the appellant. Accordingly, there shall be a decree in favour of the respondent-plaintiff for Rs. 5,000/- with interest at 12% per annum from 28-4-1981, the date of Ex.A-1, till realisation. There was no stay during the pendency of this letters patent appeal and the counsel for both sides have stated that the suit house was already registered in favour of the respondent, but they have not placed the particulars before us. Since we have allowed the letters patent appeal, we declare that the registration of the suit house in favour of the respondent-plaintiff shall be null and void and the sale consideration which is said to be lying to the credit of the suit in the trial court shall be refunded to the respondent-plaintiff forthwith. No costs.

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